Ex-Ante Margin Squeeze Tests in the Telecommunications Industry: What Is a Reasonably Efficient Operator?
European Commission - Directorate General for Competition
Regulatory Affairs - Orange
August1 13, 2013
We study the implementation of 'reasonably efficient operator' margin squeeze tests by National Regulatory Authorities in European telecommunications markets. We provide a theoretical framework in which we show how regulatory authorities deal with the asymmetries between entrants and incumbents by adjusting the 'equally efficient operator' margin squeeze test used in competition policy. Using this framework, we build a benchmark of implementation choices by inspecting authorities' guidelines, market analyses and decisions. We find that some implementation choices are very similar across authorities' decisions, whereas some others display a strong heterogeneity.
Number of Pages in PDF File: 31
Keywords: Margin squeeze, Imputation test, Regulation, Telecommunications
JEL Classification: L51, L96
Date posted: December 21, 2012 ; Last revised: August 13, 2013